The Use of Full-line Forcing Contracts in the Video Rental Industry

Justin Ho, Katherine Ho and Julie Mortimer
Authors registered in the RePEc Author Service: Kate Ho

No 14588, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We provide an empirical study of bundling in a supply chain, referred to as fullline forcing. We use an extensive dataset on contracts between video retailers and movie distributors to analyze the choices made on both sides of the market: which distributors offer full-line forcing contracts, which retailers take them up, and whether their decisions are profitable. Most large distributors offer full-line forcing contracts in our data. Our simulations indicate that their choices of which contracts to offer are profit-maximizing. However, many retailers prefer to utilize linear pricing contracts even when our model indicates that this may not be profit-maximizing.

JEL-codes: L0 (search for similar items in EconPapers)
Date: 2008-12
New Economics Papers: this item is included in nep-com and nep-cul
Note: IO
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published as Katherine Ho & Justin Ho & Julie Holland Mortimer, 2012. "The Use of Full-Line Forcing Contracts in the Video Rental Industry," American Economic Review, American Economic Association, vol. 102(2), pages 686-719, April.

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Journal Article: The Use of Full-Line Forcing Contracts in the Video Rental Industry (2012)
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